NEW YORK (AP) — General Mills said its profit fell by more than half after it took a charge to write down the value of its Green Giant frozen and canned vegetables business, to which it plans to devote less resources.
The maker of Cheerios cereal, Yoplait yogurt and other packaged foods said it recorded a $260 million charge related to the brand.
General Mills CEO Ken Powell noted that the frozen category has been declining, and that people also seem to be gravitating toward traditional "blocks" of frozen vegetables, which cost less than the vegetable blends and packages with sauces Green Giant offers.
As a result, General Mills decided to pull resources from Green Giant. That lowered the brand's estimated value, which includes long-term cash flow and other financial projections. Powell declined to comment on whether General Mills is seeking to sell Green Giant.
Looking ahead, the Minneapolis-based company said it plans to focus on improving sales in its cereal and yogurt businesses, as well as driving sales for its small but growing organic and natural foods segment.
Big packaged food makers have been stung by shoppers' interest in foods they see as healthier or more natural. Cereal sales also have suffered because of the popularity of gluten-free or high-protein diets. Although General Mills saw U.S. cereal sales improve in the quarter, they were still down 3 percent for its fiscal year.
Meanwhile, General Mills' Yoplait yogurt business rose 5 percent this year after the company pushed to catch up with the popularity of Greek yogurt with its own Greek yogurt offerings. Chief Financial Officer Don Mulligan said Greek yogurt now makes up about 20 percent of the company's total U.S. yogurt sales, compared with about 45 percent for the broader yogurt category.
Mulligan noted that the original Yoplait variety is also enjoying sales growth, in part because the company is marketing it more broadly as a snack for families, rather than focusing on women alone. And Powell added that he thinks some of Yoplait original's growth is a result of people trying Greek yogurt, and returning after deciding they don't like the taste.
For the quarter, General Mills said net sales were roughly flat at around $4.3 billion.
The Minneapolis-based company earned $186.8 million, or 30 cents per share, down from $404.6 million, or 65 cents per share, a year earlier. Earnings, adjusted for asset impairment costs and pretax expenses, came to 75 cents per share.
The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 71 cents per share, while five analysts expected revenue of $4.52 billion.
General Mills shares have increased 4.5 percent since the beginning of the year, while the Standard & Poor's 500 index has stayed nearly flat. The stock has risen nearly 2 percent in the last 12 months.